'A national scandal': Thames Water secures £3bn bailout after 'disgraceful' court ruling

Thames Water has won court approval to secure an emergency £3bn debt package from its biggest creditors – a decision campaigners have slammed as mere “stay of execution” for the company.

The cash lifeline – approved by the High Court on Tuesday (18 February) – allows the debt-ridden water giant to stave off collapse and temporary nationalisation.

Without it, the company claims it would have run out of money by the end of next month; it now has sufficient funds to operate up to October.

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But the court’s decision could mean bill hikes for Thames Water’s 16 million customers. The company is currently appealing to industry regulator Ofwat to let it increase bills by more than the 35% already permitted by the industry regulator. Customer money will continue to furnish the company’s staggering £19bn debt pile.

In his judgment, Justice Leech said that the cash injection met the necessary criteria under English corporate law. However he added that the headline interest rate on the new loan – some 9.75% – was “very, very high”.

“Customers and residents who are struggling with their bills will be horrified at these costs,” he added.

This loan could add £250 to the average household bill, claimed Matthew Topham, lead campaigner at We Own It. The average water bill already exceeds £470 per year.

“This judgement is nothing but a stay of execution for Thames Water. The privatised company will limp on for a few more months like a profit-thirsty zombie,” he said.

“This crisis loan will keep Thames Water afloat in the short-term, but their underlying business model is rotten and should be condemned. It relies on piling up debt and raising customer bills so they can pay huge bonuses and dividends – all while pumping raw sewage into our waterways. The reason they’re getting bailed out is because they ran out of other people’s money to line their pockets with. It’s only a matter of time before they end up on the edge of bankruptcy again.”

British water companies have underinvested in fixing our creaking sewage infrastructure, pumping 12.7 million hours of untreated sewage into English waterways between 2019 and 2023.

Topham called for Thames Water to be taken under a special administrative regime (SAR), where the government temporarily takes control of Thames Water.

Campaigners argue that a SAR allows government to negotiate a significant reduction in the corporate debt, due to the water company failing to discharge its responsibilities.

River Action chair and founder Charles Watson urged the government to end the “national scandal” of pollution by stepping in.

“Instead of recognising now is the time for a special administration of Thames Water, the decision saddles customers with the responsibility for funding billions of junk-rated debt while its executives, investors and shareholders escape responsibility,” he said.

“Customers will now bear the brunt of massive interest payments through higher water bills, paying for corporate failure while our rivers remain choked with sewage.”

Unions have reacted with incredulity. Cliff Roney, water worker and GMB activist, accused Thames Water of having “no shame”. 

“They have been rewarded for years of mismanagement and passing costs on to consumers with the right to rack up more debt, more interest, and more fees. Who will pay for this? Ordinary Londoners of course.”

Last week, a cross-party group of 30 MPs wrote to Ofwat’s chief executive asking for Thames Water to be placed in special administration.

“Thames Water epitomises the systemic issues plaguing the private water sector,” said Labour MP Clive Lewis, who spearheaded the letter.

“Approving a hedge fund bailout would reinforce a broken system where mismanagement and shareholder interests are rewarded at the expense of customers and the environment.”

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